Charter Hall Taking Over $725M Sydney Office Precinct From Lendlease

Australian real estate fund manager Charter Hall will be taking full control of an A$1 billion ($725 million) Sydney office precinct after entering into a deal with Lendlease to acquire the remaining 50 percent stake in the set of six commercial properties. 

The deal, which was revealed in a joint statement sent to Mingtiandi on Thursday, allows Charter Hall-managed funds to take full ownership of the O’Connell precinct, which occupies a contiguous 6,177 square metre (66,527 square foot) site in Sydney’s financial centre, after the company had paid A$500 million to purchase its existing half stake in the cluster from the Abu Dhabi Investment Authority in February.

“For Charter Hall, the transactions expand its exposure within one of Sydney’s most tightly held and strategically important CBD precincts, enhancing its position in the office sector and supporting future growth prospects,” the ASX-listed fund manager said in the statement. Lendlease, which reported a loss in February this year, said the sale was a “disciplined capital recycling initiative.”

The six assets in the O’Connell precinct, which include the 36-storey 1 O’Connell Street tower, currently produce more than A$50 million in annual income, and the location is planned as the site for Sydney’s tallest office building.

Ready for an Office Rebound

“Sydney’s CBD office market continues to outperform nationally, supported by resilient occupier demand. These dynamics are driving continued pricing tension for core office assets reinforcing Sydney’s position as a leading gateway market in the Asia Pacific region,” Lendlease and Charter Hall said in the statement.

Lendlease spent nearly ten years assembling the properties in the O’Connell precinct, with the buildings held by its Australian Prime Property Fund Commercial (APPF Commercial). 

“For APPF Commercial, the divestment represents a disciplined capital recycling initiative, crystallising value and enhancing portfolio quality to support long-term value creation and performance for its investors. Following completion, the fund will be focused on its portfolio of 100% prime office assets,” the statement said.

The transfer is being executed in phases, with the first step including contracts already exchanged on 19 O’Connell Street and strata lots within 23 O’Connell Street within the precinct, the statement said. Charter Hall has also accepted a pre-emptive offer for the remaining interests in 1 O’Connell, along with 8, 10, 16 Spring Street and remaining strata lots in 23 O’Connell Street and will exchange contracts in “the coming weeks,” per the document. 

The precinct includes heritage-listed buildings alongside offices, shopping complexes, hotels, restaurants and clubs.

A redevelopment application has been submitted seeking approval for plans involving options which would include development of a 72-storey office building connected to 1 O’Connell, according to project documents on the NSW government website. 

The sale of the precinct comes as Lendlease works to offload A$2.8 billion in assets following a strategy reset in May 2024, with the developer having reported an A$318 million loss for the six months to the end of December. 

Record Fund Inflows

Charter Hall said in February that during the second half of 2026 it had reaped A$4.8 billion in equity inflows on a gross basis, marking its largest such fundraising in three decades.

Adding to its portfolio of commercial real estate, the company in March received regulatory approval to take over management of A$1.2 billion in property funds backed by Melbourne-based superannuation fund CareSuper. 

In February Charter Hall added some retail assets to its portfolio with the purchase of three sub-regional shipping centres in Sydney, Melbourne and Brisbane from LaSalle Investment Management for A$360 million.

During April, the real estate fund manager purchased a large car dealership in southern Sydney for A$58.8 million, according to a post on LinkedIn from Jack Harrison, director NSW capital markets at Cushman & Wakefield.